Office Insights: Get out of your Pre-COVID Rates or Get a New Modern Office Space for your Business

One benefit of collaborating with brokers who specialize in office spaces is their knowledge of actual closing rates compared to the listed rates for rent. For instance, a property in Makati might list a rate of PHP 1,400.00 per sqm but actually close deals at PHP 900.00 per sqm. While you might conclude negotiations at PHP 1,100.00, office brokers, who analyze the market daily, can increase your chances of securing more advantageous rates.

Our Insights

Vacancy rates for office spaces are still high compared to pre-COVID rates. Metro Manila is averaging 20% vacancy across the business districts, and this alone should be enough basis that rental rates should not be the same as pre-COVID. It's a simple demand vs. supply argument.

Office space tenants are due to a reshuffle. Current occupiers will most likely be the same and new occupiers will only take a small portion of the upcoming new take-ups. This creates opportunities for tenants as landlords compete for the movement of inventory.

Office occupiers are also struggling with current productivity given the WFH dilemma and will need better office spaces to motivate their workers to come back to the office. Similar to New York's current CRE problem, businesses struggle to ask their employees to come back to aged offices with little to almost no amenities as workers prefer the comfort of their own homes now. Not to mention of course the inconvenience of commuting.

For office occupiers to battle the productivity problem, it only makes sense to use the vacancy factor to negotiate with landlords. Assuming landlords would like to sustain office space take-up, businesses need to strive. To put it simply, both landlords and tenants must work together to bring back the workforce back to the office.

Rent is of course the number one factor. Some, however, are keener to get better spaces if they were to retain the rate they are paying.

To ensure that your business is getting fair-market rental rates, it would be ideal to get an assessment regularly with your broker. Currently, depending on the location, but let's say you are in Makati or BGC, and you are paying -/+ PHP 1,000.00/sqm but you are not in a premium building, we suggest to re-assess your options. With new office developments in the market, you might be better off transferring your operations into a better building. Should you wish to stay and avoid the hassle of relocating, the next best step is to renegotiate your terms.

How We Can Help

Assessment

If you would like an assessment of your current real estate cost versus market price, we can help by giving you a financial overview of your current space versus similar properties nearby. This will help you better see if you are currently overpaying or you are getting your money's worth.

Planning If the decision is made to relocate your office, we will offer a comprehensive plan for setting up your new space. Given the scale of this project, it is essential to hire experts who can help you map out a plan to help you avoid common mistakes and guide you to a successful turnover.

Execution

We provide you a comprehensive list of suitable options that match your needs. We exhaust the market availability ensuring that all properties are considered fairly. We further help you with negotiations for your shortlisted properties and we help you review proposals and contracts.

Advantage

Compared to doing things on your own, having an office-focused broker will help you save time in gathering information and relevant data to better decide for your business.

Excerpt:

• Metro Manila vacancy rates have almost flatlined at 20% since 4Q 2022.

• Makati has slightly improved its vacancy from 4Q 2023 to 1Q 2024 but is still high at above 10%.

• BGC jumped to 13.70% vacancy rate by the end of 1Q 2024 as new supply came in -- Uptown Eastgate in Uptown BGC.

  
  

  
  

  
  

  --- About Office Pro Philippines:

  
  

  We offer office space services from finding the best suit office building for you to locate your business, negotiating and liaising with multiple landlords and their representation team, and guiding you all throughout the process of office lease acquisition. We then take you to the next step of designing your space. We take pride in our team of architects and engineers who we guarantee will conceptualize, design, and build that impactful workplace for your company. One that will inspire and motivate your people. Our expertise on the office space is the advantage you need to successfully deliver your workplace on time, at cost, and within the best of standards.